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201696295
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Memorandum, State Department Summary of Telegrams
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document
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201696295
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document
title
Memorandum, State Department Summary of Telegrams
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collections
Records of the Naval Aide to the President (Truman Administration)
State Department Briefs Files
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201696295
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30
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1949-11-30
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11
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1949
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nara-archive
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63e6e37076c17b7f
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DEPARTMENT OF STATE
OFFICE OF THE SECRETARY
WASHINGTON
November 30, 1949
SUMMARY OF TELEGRAMS
CHINA
Our Embassies in London and Paris have been informed that
the Vatican is currently putting pressure on the French
government to recognize the Chinese Communists, on the grounds that
until the Vatican has recognized, it lacks the means to oppose Commu-
nism and protect Catholic interests in China, but that the Vatican
cannot extend recognition until some prominent Catholic country has
taken the first step. The French Foreign Office has indicated,
however, that their position on this question remains unchanged.
Our Consul General in Shanghai reports that on the basis
of six months' perspective since the takeover in that city, it appears
that the Communists are now caught in an inflationary spiral on a
nation wide scale, even though price increases in Shanghai have
momentarily halted. In general the local bureaucracy has been doubled,
public utilities have continued to operate at a deficit, and taxation
is only covering about 30 percent of current military costs. Economic
observers feel that the inflation will continue, almost regardless
of what steps may be taken, and estimate that the really critical
period will be from February through June, 1950, with a food crisis
and heavy unemployment anticipated after Chinese New Year.
TRIESTE
We have informed the Yugoslav deputy Foreign Minister,
in response to his request that we urge the Italian
government to accept a compromise solution of the Trieste question,
that we still stand on our earlier proposal for the return of Trieste
to Italy. We indicated, however, that if the Italian and Yugoslav
governments work out a mutually acceptable agreement we would be
willing to consider it together with other parties to the Italian
peace treaty.
DECLASSITICO
E.O.
1079
State Dirt
C
11.13 to
By NLT. HC